The Most Important Factor Of Startup Success

0

Whenever you think of startups, you very likely think of young people brimming with ideas sitting in garages and dorm rooms and solving problems with technology. We are conditioned in a way to consider the idea even over the person who came up with it, but after listening to entrepreneurs, I’ve come to learn, it’s not about the quality of the product idea or even the founders, it’s about the team that grows with the company because if that’s not right, the nascent company probably won’t succeed.

A company is typically founded by one or a few committed people who carry their vision forward to create some kind of product: an Apple computer, Amazon.com, eBay, Facebook or Salesforce.com. All of these companies had one or more people who had the vision and the commitment to see it through to success.They all have great backstories about how they came to be (even if some of them like eBay’s PEZ dispenser story probably aren’t true.)

After that initial burst of founding energy, it takes hard work to define and articulate a vision to employees who come on board afterward. The founders have to find a way to set goals, even with the understanding that the target is always going to be moving and they have adjust as they go along.

Susie Kim Riley, a serial entrepreneur who has started several successful companies says forming the right core team is absolutely crucial. At a talk at the Boston TechJam last month, she likened it to a military operation. “My colleagues would be jet lagged, food deprived, sleep deprived –and they would have a meeting. You have to perform,” she says

“Imagine you’re a marine. Be on top of your game. You’re on a mission and a lot of times it’s like a battle, but with the right team and the right beliefs you are going to get through it,” she said.

Uwe Horstmann, co-founder and managing director at Project A Ventures in Berlin says finding the right people beyond that core founder group is even more crucial because it’s one thing to form that core team, but it’s another to begin to articulate a vision to newer people as they join the company. “One of the core qualities that we look for in founders is his ability to articulate and communicate a vision for the company well. It sounds trivial, but it really isn’t,” he said.

He added, “It requires a lot of empathy to take a step back and think through how this closely knit culture might feel to someone who just joined. There’s always an inner circle, the first employees, highest up in the food chain, closest to the founders, who are well-informed and on board, but you really want to have everyone involved, engaged and fired up to maximize output –and to create a great place to work,” Horstmann explained.

Kristina Prokop, a co-founder at Berlin startup, Eyeota, one of the companies being funded by Project A explained her 4-year-old company is up to 20 people right now, and they are in the process of hiring more employees. As part of that process, she and her fellow co-founders are meeting to define the mission of their company, so these new employees can clearly understand and execute it.

“This is a serious thing. This is what we are figuring out: communicating and creating a vision and putting down on paper the vision we are going to communicate to employees,” she said.

Tim Wegner, a co-founder at Project A startup Minodes says the founding members have to come to an agreement and present a united front to employees. “We have different discussion around the founder’s team and how you behave around employees. It’s important to get along and have strong discussions around where vision is going to go.”

Andy Miller, another Boston TechJam speaker, and a serial entrepreneur who sold his startup CardStar, Inc to Constant Contact in January 2012, likens new startup employees to a roller coaster ride because as he points out, starting a company is in fact a wild ride and being part of that, especially at the beginning takes individuals who are at least partly risk takers.

“As entrepreneurs when we start a company, it’s the wildest ride of our lives. When you are putting a team together, they are getting on that ride. How do you recognize people on your team. What are their triggers and how do you manage them,” he asked.

He offers some concrete help saying transparency is absolutely the key. You have to be honest with your employees about what’s happening. Secondly, he says focus on that team and alignment of people and finally empower your team to drive your company’s success.

He even offered a formula to help define that: People + Execution = Success.

He added that conversely if you have a toxic team it’s going to undermine your mission and very likely will lead to failure.

Horstmann believes that transparency is really the key element here. “A main lesson in all of this was transparency, especially in regard to internal, sensitive information. In the past, companies tended to be overly cautious about leaks. But today, we find that founders will gain more than they’ll potentially lose when sharing results, news and data with their extended teams. People will buy in better into the vision and be more receptive to a founder who explains his plan going forward based on that information,” Horstmann explained.

Eyeota’s Prokop says her company has incorporated Google’s OKRs (objectives and key results) system to help measure how well new employees are doing against the objectives the company has defined. Her company has certain objectives broken down by quarter and the goals help define how each employee will contribute to achieving those objectives.

She says this approach is particularly useful to startups like hers because it really brings discipline to the process and forces them to define that clear vision to help produce strongly defined goals for the employees who must work to achieve them.

This is particularly challenging in an early startup environment where jobs are not always clearly defined, especially among early employees. Prokop says early employees need to be flexible around their jobs and be like baseball’s utility infielders playing a lot of positions. You have to jump in and help across a lot of departments because there is so much to be done and there is a general lack of expertise you see across departments in larger organizations..

Much like Miller from Constant Contact, Prokop says it’s important to find those right people because she says a lot of people think they want to work for a startup, but they just don’t understand what that entails. She says there are new priorities and shifting targets all the time and not everyone can handle that.

Minodes’ Wegner says the core team shouldn’t be afraid to argue about the vision and clash about what they want the company to represent, but when you’re done, present it to the employees like you mean it or you’ll foster confusion. He adds, you also have to trust them enough to give them opportunities to try new things within the framework of the larger goals of the organization –and it’s a hard line to find sometimes.

“It’s important for your team to know where they are going. If it’s not clear, employees get confused and lose track of the success factors, but at the same time, you need to give people the opportunity to try things,” he said.

Startups come and go for a lot of reasons, but a lot of good ideas fail because the founding team fails to take into consideration the people factors. It’s one thing to come up with the great idea, it’s another to pull together the right group of people to execute it. It’s not always going to be easy to do, but it’s absolutely the most likely factor that’s going to determine your startup’s success or failure.